Postmaterialism and corporate tax avoidance

• Main Authors: WANG, Jiwei, YE, Kangtao
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Postmaterialism; culture; tax avoidance; tax enforcement; China; Cross-country; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/2001; https://ink.library.smu.edu.sg/context/soa_research/article/3028/viewcontent/Postmaterialism_and_Corporate_Tax_Avoidance___edited.pdf
• Institution: Singapore Management University

Using a proprietary dataset of China tax audits, we found that firms owned by investors from countries with higher postmaterialism values were less likely to engage in tax-avoidance behavior in China. In addition, we found some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further used a cross-country sample from 21 countries over 22 years. The evidence from the cross-country sample was consistent with the findings obtained from the China tax audits setting.